…Emerging Market equities have continued to lag in 2Q13 as macro data has softened, most notably in China…As the macro data and markets have weakened, the investor exuberance we witnessed in late 2012/early 2013 has since faded. EM equity funds have seen outflows in 6 out of the last 8 weeks, and our EM trading rule is firmly back in neutral territory…In addition, our April Fund Manager Survey revealed the lowest number of global investors overweight EM equities in 1.5 years.

There’s one hope: Emerging markets are cheap–but even that may not be enough. They write:

Emerging Market equities remain cheap relative to their own history and relative to the rest of the world, and continue to trade two standard deviations below average versus DM. While consensus 2013 earnings growth expectations for EM remain robust at 15.7% (and well above the 9.4% expected for DM), it is worth noting that EM EPS growth expectations have started to roll over in recent weeks.

About Emerging Markets Daily

Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. Barrons.com’s Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools. She studies multiple languages and photography.